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Loan proceeds can be used for a variety of purposes, from funding a new business, to buying your fiancée an engagement ring. But with all of the different types of loans out there, which type is best? I will take you through a list of some of the more popular types of loans, as well as their characteristics and their usefulness in meeting your financial needs.

1. Personal LoansThese loans are offered by most banks, and the proceeds may be used for virtually any expense (from buying a new stereo system to paying off a common bill). Typically, personal loans are unsecured, and range anywhere from a few hundred to a few thousand dollars. As a general rule, lenders will typically require some form of income verification, and/or proof of other assets worth at least as much as the individual is borrowing. The application for this type of loan is typically only one or two pages in length. Approvals (or denials) are generally granted within a few days.

In short, personal loans (in spite of their high interest rates) are probably the best way to go for individuals looking to borrow relatively small amounts of money, and who are able to repay the loan within a couple of years.

2. Home-Equity Loans Homeowners may borrow against the equity they\'ve built up in their house using a home-equity loan. In other words, the homeowner is taking a loan out against the value of his or her home. A good method of determining the amount of home equity available for a loan would be to take the difference between the home\'s market value and the amount still owing on the mortgage.

The loan proceeds may be used for any number of reasons, but are typically used to build home additions, or for debt consolidation. The interest rates on home-equity loans are very reasonable as well. In addition, the terms of these loans typically range from 15 to 20 years, making them particularly attractive for those looking to borrow large amounts of money. But, perhaps the most attractive feature of the home-equity loan is that the interest is usually tax deductible.

3. Home-Equity Line of CreditThis line of credit acts as a loan and is similar to home-equity loans in that the consumer is borrowing against his or her home\'s equity. However, unlike traditional home-equity loans, these lines of credit are revolving, meaning that the consumer may borrow a lump sum, repay a portion of the loan, and then borrow again. It\'s kind of like a credit card that has a credit limit based on your home\'s equity! These loans may be tax deductible and are typically repayable over a period of 10 to 20 years, making them attractive for larger projects.

4. Small Business Loans

The Small Business Administration (SBA) or your local bank typically extend small business loans to would-be entrepreneurs, but only after they\'ve submitted (and received approval for) a formal business plan. The SBA and other financial institutions typically require that the individual personally guarantee the loan, which means that they will probably have to put up personal assets as collateral in case the business fails. Loan amounts can range from a few thousand to a few million dollars, depending on the venture.

While the term of the loan may vary from institution to institution, typically, consumers will have between five and 25 years to repay the loans. The amount of interest incurred from the loan depends on the lending institution in which the loan is made. Keep in mind that borrowers can negotiate with the lending institution with regard to the level of interest charged. However, there are some loans on the market that offer a variable rate.

Small business loans are the way to go for anyone looking to fund a new or existing business.

Bottom LineWe are professional advisers to guide you through a smooth process of paper work and explain to you in plain english every aspect of the loan you are looking to take.